Mon 13 Nov 2017 09:30

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Commentary

Brent crude futures were at $63.57 per barrel at 0744 GMT, up $5 cents from their last close. U.S. WTI crude was at $56.78 per barrel, up $4 cents. I wonder what accumulator odds you could have gotten on Trump elected as president, UK votes for Brexit and oil price up to almost $65 towards the end of 201. I'm pretty sure if I had put that on, I wouldn't be typing this commentary for you right now. Over the last month, prices have risen around 20%, smashing through the previously thought impossible level of $60. As I have mentioned previously, there seems to be no fundamental issues to have justified quite such a move. But what about increasing demand? It is rising gradually, not anything to bump us up to where we are now. But what about inventory levels? Yes, take a seat, we have seen falls in stocks, but let's take a bigger picture, the big kind of picture like when you buy a 100" TV for your front room and it melts your retina when you turn it on... the movement in global stock levels isn't anywhere near the kind of movement that seems to be exciting people on EIA data day. You can bang on about fundamentals all you like, how it's not right we are up at these levels, but the market has its focus on the unfolding political developments. Northern Iraq, Kurdish oil, Saudi purges, Saudi-Yemen and Saudi-Iran (proxy war in Lebanon), North Korea and its potential to disrupt a third of the shipping tonnage in the world. If you were a future forecaster with no vested interest in oil, I'm sure you would be putting the price of crude up too. If in doubt, and you should be with the market not being driven off fundamentals, then hedge.

Fuel Oil Market (November 10)

The front crack opened at -7.85, strengthening to -7.60, before weakening to -7.90. The Cal 18 was valued at -7.75.

Fuel oil cracks firmed, recovering from losses in the previous session, amid higher crude prices, broker sources said. Discounts for the 180-cst the fuel oil crack to Brent crude for December have widened this week, at -$4.27 a barrel, compared with -$3.71 on Monday.

At the start of the month, fuel oil cracks rose to a near five-week high on expectations of tightening fuel oil supplies into 2018 amid shrinking output and fewer arbitrage bookings into Asia, as well as firm demand for the industrial fuel.

Fuel oil stocks in ARA rose for a third straight week, up 4 percent, or 57,000 tonnes, at 1.413 million tonnes in the week to Nov. 9. Compared with last year, ARA fuel oil inventories are up 122% and are well above the five-year average of 895,000 tonnes

Economic Data/Events: (UK times)

* 11am-12pm: OPEC issues monthly market report

* 1:30pm: Bloomberg forecast of U.S. waterborne LPG exports

* Today:

** Bloomberg proprietary forecast of Cushing crude inventory change plus weekly analyst survey of crude, gasoline, distillates inventories

** EIA's Drilling Productivity Report

** CFTC weekly commitments of traders report with data through Nov. 7 on U.S. commodity futures, options (delayed from Friday by U.S. holiday)

** Mexico Offshore Congress, Mexico City, 1st day of 2, including speakers from Pemex, Chevron, Sener

** Abu Dhabi International Petroleum Exhibition and Conference

(Adipec) starts, 1st day of 4. Speakers include OPEC Secretary- General Mohammad Barkindo, U.A.E. Energy Minister Suhail Al Mazrouei

** Azeri Supsa, CPC Blend loading programs for December

* See OIL WEEKLY AGENDA for this week's events

Singapore 380 cSt

Dec17 - 370.50 / 372.50

Jan18 - 369.00 / 371.00

Feb18 - 367.50 / 369.50

Mar18 - 366.00 / 368.00

Apr18 - 364.50 / 366.50

May18 - 363.00 / 365.00

Q1-18 - 367.50 / 369.50

Q2-18 - 363.00 / 365.00

Q3-18 - 357.50 / 360.00

Q4-18 - 352.25 / 354.75

CAL18 - 361.25 / 364.25

CAL19 - 323.75 / 328.75

Singapore 180 cSt

Dec17 - 375.00 / 377.00

Jan18 - 374.00 / 376.00

Feb18 - 373.00 / 375.00

Mar18 - 372.00 / 374.00

Apr18 - 370.75 / 372.75

May18 - 369.75 / 371.75

Q1-18 - 373.00 / 375.00

Q2-18 - 369.25 / 371.25

Q3-18 - 364.25 / 366.75

Q4-18 - 359.00 / 361.50

CAL18 - 367.50 / 370.50

CAL19 - 332.50 / 337.50

Rotterdam 380 cSt

Dec17 352.00 / 354.00

Jan18 350.50 / 352.50

Feb18 349.75 / 351.75

Mar18 348.75 / 350.75

Apr18 347.75 / 349.75

May18 346.75 / 348.75

Q1-18 349.75 / 351.75

Q2-18 347.00 / 349.00

Q3-18 341.50 / 344.00

Q4-18 333.00 / 335.50

CAL18 343.50 / 346.50

CAL19 301.50 / 306.50


Lease agreement between Inter Terminals Sweden and the Port of Gothenburg, signed on July 1st. Pictured: Göran Eriksson, CEO of the Port of Gothenburg (left) and Johan Zettergren, Managing Director of Inter Terminals Sweden (right). New Gothenburg lease an opportunity to expand green portfolio: Inter Terminals  

Bunker terminal operator eyes tank conversion and construction projects for renewable products.

Map of US Gulf. Peninsula extends US Gulf operation offshore  

Supplier to focus on Galveston Offshore Lightering Area (GOLA) in strategy to serve growing client base.

The M/T Jutlandia Swan, operated by Uni-Tankers. Uni-Tankers vessel gets wind-assisted propulsion  

Fourth tanker sails with VentoFoil units as manufacturer says suction wing technology is gaining traction.

Port of Gothenburg Energy Port. Swedish biomethane bunkered in Gothenburg  

Test delivery performed by St1 and St1 Biokraft, who aim to become large-scale suppliers.

Image from Cockett Marine Oil presentation. Cockett to be closed down after 45 years  

End of an era as shareholders make decision based on 'non-core nature' of Cockett's business.

Petrobras logo. Petrobras confirms prompt availability of VLS B24 at Rio Grande  

Lead time for barge deliveries currently five days.

Opening of the IMO Marine Environment Protection Committee (MEPC), 83rd Session, April 7, 2025. IMO approves pricing mechanism based on GHG intensity thresholds  

Charges to be levied on ships that do not meet yearly GHG fuel intensity reduction targets.

Preemraff Göteborg, Preem's wholly owned refinery in Gothenburg, Sweden. VARO Energy expands renewable portfolio with Preem acquisition  

All-cash transaction expected to complete in the latter half of 2025.

Pictured: Biofuel is supplied to NYK Line's Noshiro Maru. The vessel tested biofuel for Tohoku Electric Power in a landmark first for Japan. NYK trials biofuel in milestone coal carrier test  

Vessel is used to test biofuel for domestic utility company.

Pictured (from left): H-Line Shipping CEO Seo Myungdeuk and HJSC CEO Yoo Sang-cheol at the contract signing ceremony for the construction of an 18,000-cbm LNG bunkering vessel. H-Line Shipping orders LNG bunkering vessel  

Vessel with 18,000-cbm capacity to run on both LNG and MDO.


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